| Luminar: Lazr-focused on guidance Nov-2021 |
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The Story
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| In this valuation, I imagine a world where self-driving cars took off and Luminar managed to meet both of their revenues and EBITDA guidance before reducing their growths to be closer to the the mature Semiconductor industry. Mature Semiconductor industry was selected as the stable growth targets for operating margin and sales/capital due to being a closer target for the operating margins and similar value proposition (value proposition in both hardware and software). Auto Parts was chosen as the industry beta for the cost of capital calculation since that is the business Luminar is in. |
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The Assumptions
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| Base year | Years 1-4 | Years 5-10 | After year 10 | Link to story | |
| Revenues | 14.31%➡142.96% | 84.86%➡5.52% | 1.55% | Grows according to the guidance but -10% in 2030 to account for the narrative change due to semiconductor crisis. Risk-free rate for the terminal year. | |
| Operating margin | (343.12%) | (318.62%)➡32.61% | 38.80%➡19.89% | 18.00% | Grows according to the guidance up to 2025, then falls back to 3rd quartile of mature Semiconductors firms in stable growth. |
| Tax rate | 27.00% | 27.00% | 27.00% | 27.00% | Marginal tax rate according to 2021 KPMG data. |
| Reinvestment | Sales/Capital = 1.03 ➡ 0.71 | 44.22% | Median sales/capital of all Semiconductors firms to the median of mature Semiconductors firms. | ||
| Cost of Capital | 2.57%➡2.88% | 2.98%➡3.51% | 3.61% | Moving towards Auto Parts industry average | |
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The Cash Flows
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| Revenues | Operating Margin | EBIT | EBIT (1-t) | Reinvestment | FCFF | Implied ROIC | |
| Base year (2021) | $26 | (343.12%) | ($87) | ($87) | (225.67%) | ||
| 1 (2022) | $29 | (318.62%) | ($93) | ($93) | $4 | ($97) | (220.54%) |
| 2 (2023) | $59 | (165.24%) | ($98) | ($98) | $30 | ($129) | (135.27%) |
| 3 (2024) | $250 | (14.55%) | ($36) | ($36) | $199 | ($235) | (13.41%) |
| 4 (2025) | $608 | 32.61% | $198 | $198 | $387 | ($189) | 30.08% |
| 5 (2026) | $1,123 | 38.80% | $436 | $411 | $581 | ($170) | 33.18% |
| 6 (2027) | $1,868 | 35.02% | $654 | $478 | $874 | ($396) | 22.60% |
| 7 (2028) | $2,841 | 31.24% | $888 | $648 | $1,192 | ($544) | 19.60% |
| 8 (2029) | $3,759 | 27.46% | $1,032 | $753 | $1,175 | ($422) | 16.82% |
| 9 (2030) | $4,338 | 23.67% | $1,027 | $750 | $776 | ($27) | 14.26% |
| 10 (2031) | $4,577 | 19.89% | $910 | $665 | $337 | $327 | 11.88% |
| Terminal year | $4,648 | 18.00% | $837 | $611 | $270 | $341 | 3.51% |
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The Value
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| Terminal cash flow | $341 | |
| Terminal cost of capital | 3.61% | |
| Terminal value | $16,542 | |
| PV (Terminal Value) | $12,267 | |
| PV (CF over next 10 years) | ($1,645) | |
| Sum of PV | $10,622 | |
| - Adjustment for distress | $956 | Probability of failure: 10.00% |
| - Debt & Minority Interests | $0 | Based on Ba1 rating from Moody's |
| + Cash & Other Non-operating assets | $581 | |
| Value of equity | $10,247 | |
| - Value of equity options | $352 | |
| Number of shares | 342.21 million | |
| Value per share | $25.01 | Stock was trading at $17.59 |
In millions USD except Value-per-share.